2016-05-15

Turning Point for Real Estate? First-Tier Home Sales Slow in May

China’s home sales continued to grow in April, signaling that tightening measures designed to stem a home-price surge in some large cities have yet to slow the market’s upward momentum.

New-home sales gained 63.5 percent to 793.7 billion yuan ($122 billion) last month from a year earlier, according to Bloomberg calculations based on data the National Bureau of Statistics released Saturday. The increase followed a 71 percent surge in the previous month.

This headline from iFeng says the market is hot and cold, with prices rising and sales dropping in the first-tier cities. 楼市冷热互现：价升量跌 难觅3万以下普宅 Price follows volume.

From the national property market to see, Shenzhen, Shanghai, Beijing second-hand housing market has been the first to fall, then the situation is not optimistic, given the April second-hand housing turnover has significant turning point, from past experience, in the second quarter continued to fall in the second-hand housing possible is high. Insiders said that after more than a year to go through inventory policies, market regulation will enter the second half, first-tier cities of the property market tightening policy environment, people's expectations of future market vary, so that the performance of each week of ups and downs since April new home volatile, this volatility is expected in the future will continue.

The first-tier cities are not representative of China's total real estate market, but they do serve as a psychological barometer. Shenzhen prices were up 60 percent y/y before the second-tier markets started taking off.

The article also details land auctions in Beijing, which will have all in costs above 30,000 yuan per square meter even for low end public housing, with other properties having costs above 70,000 yuan per square meter. Beijing, like other first-tier cities, has an excess of demand, not supply:

Centaline Dawei, chief analyst analysts believe that Beijing property market currently has a comprehensive high-end new housing, the average price of the first comprehensive history there have been 30,000 yuan / square meters, is expected annual average price is expected to be close to 40,000 yuan / square meter . At the same time, the scarcity of land supply, land prices rise, Beijing commercial housing stock continued to drift lower in the case of supply shortages, closing strong, high prices. From the future supply of view, Beijing has entered the stage of urbanization, the supply is difficult to significantly increase after 7090, although the policy increased the supply of land, but in 2016 the structure of supply and demand tension is difficult to change the situation.

Developers are speaking as if they don't believe their run of good luck will continue:

Greenland Holding Group Chairman and President Zhang Yuliang

The industry's "long-term turning point" has arrived

With the slowdown in China's overall economic growth, urbanization also slowed the rate of expansion, urbanization in the past that "major demolition and construction" formula has been basically completed, the overall expansion of the real estate industry, house prices rose unilateral era It has been lopsided. The overall balance of supply and demand market is turning from the past in short supply, the industry's "long-term turning point" has arrived. At the same time, the reversal of the relationship between market supply and demand, restructuring and upgrading of economic structure, making the residential, commercial real estate and industrial real estate demand escalating, the new market situation of the product proposed new requirements.

E-House China Dingzu Yu CEO:
The possibility of second-hand housing continued to fall in the second quarter of great

The government has been sounding "stable prices" first-tier cities, second-hand housing data are different degrees of decline. Among the most stringent regulation of Shanghai, Shenzhen, the decline was most pronounced in April Shanghai and Shenzhen trading volume of 1.77 million square meters and 720,000 square meters, respectively, the chain fell 62% and 53%, and not half of March volume, up run Shanghai fell 62%, down 19% year on year in Shenzhen, the city is only a sample of their volume is less than last year. From the current situation, Shenzhen, Shanghai, Beijing second-hand housing market has been the first to fall, then the situation is not optimistic, though other hot cities Yishoufang continue to triumph, but Nanjing, Qingdao and other parts of the city second-hand housing turnover has come down. Given the April second-hand housing turnover has significant turning point, from past experience, the possibility of second-hand housing continued to fall in the second quarter large, as to whether the full impact Yishoufang or to further observation.